9911796707
TMI Blog2016 (8) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. For the assessment year 2008-09, the petitioner filed return of income declaring total income of Rs. 3.75 crores (rounded off). The return was taken in scrutiny. The Assessing Officer passed order under section 143(3) of the Act on 22.12.2012 assessing assessee's total income at Rs. 13.16 crores. To reopen such assessment, impugned notice came to be issued. The Assessing Officer had recorded following reasons for issuing the notice. " In the present case, assessment u/s. 143(3) of the Act was completed on 22.12.2010 by making following additions / disallowances: (i) Disallowance u/s.40A(2)(b) of the Act. (ii) Disallowance of deduction claimed u/s. 80IA(4) of the Act. (iii) Disallowance u/s.14A of the Act. During the year u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses has been debited to the windmill divisions. Any line of business cannot function on its own. The assessee company seems to have debited only direct expenses to the windmill divisions. Where all the common expenses have been debited to the tea division, thereby artificially pumping its income eligible for deduction u/s.80IA leading to lower returned income and consequently lower taxes. Hence, the common expenses, needs to be allocated between both lines of business in order to arrive at true picture. Since, one line of business is a trading concern (tea division) and other is manufacturing concern (generation of electricity), the ratio of turnover cannot be a correct ratio owing in the difference in their basic character. Turnover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Hence, there is escaped assessment within the meaning of section 147 of the Act. Thus, it is a fit case for issuing notice u/s. 148 of the Act." 4. The petitioner raised detail objections to the notice for reopening under letter dated 24.12.2015, in which, with respect to the true and full disclosures, the assessee had contended as under: "In respect of the aforesaid reason for reopening, we would like to submit that the nature of administrative expenses and other expenses already stands verified and accepted in the original assessment proceedings and there is no doubt as regards the claim thereof as made in the respective divisions, which stands established from the following facts. (a) First of all, our company has maintained separa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had even called for explanations in respect of variation in certain expenses and these explanations also stand furnished by us and accepted by the then learned AO. (f) Lastly but most importantly, it is very pertinent to note that the other expenses of Rs. 58,43,886/- which have been held to be in the nature of common expenses and which are proposed to be bifurcated between the 2 divisions of the company, already stands fully disallowed in the computation of income except an amount of Rs. 36,812/- , as being in the nature of donation, interest on late payment of TDS, loss on sale of assets, etc. and hence, there is no question of these expenses being wrongly claimed in the tea division instead of the windmill division, to claim higher ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exempt under section 80IA of the Act. According to the Assessing Officer, the assessee had not correctly apportioned the expenditure between these two businesses and thereby artificially inflated the income of the eligible businesses to gain larger deduction. 7. We are not on validity of the Assessing Officer's contention. We are concerned only with the question of failure on part of the assessee to disclose fully and truly all material facts. 8. It is not even the case of the Assessing Officer that he noticed the disproportionate allegation/allocation of expenditure in the accounts of non eligible business through any material extraneous to the assessment records. In fact, his entire observations contained in the reasons recorded are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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